Wartime Austerity : Egyptian Workers Flee Iraq Economic Gloom

Seated on the pavement in the shade of a tree on central Baghdad’s Sadun Street, scores of Egyptian workers clutch their passports and airline tickets.

An Iraqi policeman guards the door of the Egypt Air office. Inside, airline officials try to cope with the daily rush of Egyptians wanting to return home.

Since austerity measures were introduced in April because of Iraq’s empty foreign currency coffers, including severe restrictions on the flow of cash leaving the country, a majority of Iraq’s Egyptian labor force, estimated at more than 1 million, is believed to have left or be leaving the country.

Less Attractive

Difficulties in sending earnings to families in Egypt have made Iraq less attractive.

Meanwhile, on the lawn in front of the offices of a South Korean construction company in eastern Baghdad, engineers display their skills in table tennis. The accountant sits at his desk and waits for better days.

Iraq’s economic crisis at the start of the seventh year of the Gulf War this month has created a paralysis that also has left its mark on the living standards of the capital’s 3.5 million inhabitants.

After this spring’s decision by the government to cut imports by up to 60%, non-essential items have become virtually unavailable; spare parts and household provisions have to be found wherever possible.

Difficulties Ahead

Wealthy Iraqis still fill the traditional Iraqi mazgouf smoked fish restaurants along the banks of the Tigris river and hold grand wedding receptions in luxury hotels in an effort to make up for a ban on travel abroad, which was imposed in the early stages of the war.

But a typical Iraqi who spots a merchant selling eggplant by the side of the road does not hesitate to stop. He will buy in bulk rather than risk finding no fresh supplies at the vegetable market.

President Saddam Hussein has not concealed the difficulties that lie ahead because of the plunge in oil prices and the increased cost of the war against Iran, estimated at up to $1 billion a month at the peak of fighting earlier this year.

“We have taken precautionary measures to protect our economy, to guarantee the basic needs of our people in the quantity appropriate under the current circumstances,” Hussein said in July.

Settlement Sought

Amid declining living standards and the suspension of Iraq’s prestigious construction projects, such as an international airport at Basra, the country’s second-largest city, the Iraqi leadership has stepped up its calls for a peaceful settlement with Iran.

Baghdad’s conditions for peace have remained largely unchanged for the last four years: a return to international borders, an exchange of prisoners, a non-aggression pact and an agreement not to interfere in each other’s internal affairs.

The Iranians demand financial compensation for the war and insist upon the overthrow of Hussein, a figure whose position at the head of the ruling, and apparently unopposed, Baathist Party is beyond question.

Despite the economic gloom, nothing short of a major Iranian victory--the Iranian capture of Basra in the south or an advance in the central sector to within striking distance of Baghdad--threatens to topple the Iraqi leader, diplomats and political observers here agree.

Billions in Debt

Iraq’s largest creditor is Italy, owed about $2 billion, followed by Japan, West Germany and France, each owed more than $1 billion. Those sums only include companies covered by guarantees from export credit agencies.

Gulf countries are owed a staggering $25 billion to $30 billion, according to the estimates of the well-informed Middle East Economic Digest.

Baghdad has rescheduled all debts due in 1986 and requested two years’ credit for imports.